Financial Analysis: แบบฝึกหัด

A company has a Net Profit Ratio of 12% and a Total Assets Turnover of 1.5 times. Its Gearing Ratio is 50%. The current market interest rate has recently increased significantly. Assuming all else remains constant, which of the following is the most likely impact on the company's Return on Capital Employed (ROCE) and the overall risk to its shareholders?

A company's Return on Capital Employed (ROCE) is 15%, while the industry average is 18%. The company's Net Profit Ratio is 10%, which is also below the industry average of 12%. However, its Total Assets Turnover is 1.5 times, which is comparable to the industry average. The company has a significant proportion of non-current liabilities.

Which of the following is the most appropriate conclusion based on this information?

A manufacturing company is considering a major expansion. It currently has a Gearing Ratio of 60% and a high interest coverage ratio. The expansion will be financed primarily through additional long-term bank loans. Management believes this will significantly increase revenue and net profit. However, analysts express concern about the company's financial stability in the long term.

Which of the following statements best explains the analysts' concern?

A firm's inventory turnover ratio increased from 6 times last year to 9 times this year. During the same period, the gross profit ratio remained constant at 25%. Which of the following is the most likely cause for this change?

A company's gross profit ratio increased from 25% to 30% over the past year. However, its net profit ratio remained relatively stable at 10%. Which of the following is the most likely explanation for this situation?

Alpha Corp. uses cash of \(\$200,000\) to purchase new non-current assets. Explain the immediate impact of this transaction on its current ratio and total assets turnover ratio, assuming all other figures remain constant.

A company's Gross Profit Ratio declined from \(35\%\) in 2022 to \(30\%\) in 2023, despite an increase in sales revenue. Identify two possible reasons for this decline in gross profit ratio, and suggest one way to improve it.

A retail company decides to extend its credit terms to customers from 30 days to 60 days to boost sales. Explain the likely impact of this decision on the company's average trade receivables collection period and its quick ratio, assuming sales increase significantly but not immediately. Will this strategy necessarily improve the company's profitability?

Vibrant Living Co. Ltd. has provided the following comparative financial information for the years ended 31 December:

Income Statement Extracts:

Statement of Financial Position Extracts:

Industry Averages for 2023:
Gross Profit Ratio: \(42\%\)
Current Ratio: \(2.1:1\)
Gearing Ratio: \(35\%\)

(a) Calculate the following ratios for Vibrant Living Co. Ltd. for both 2022 and 2023:
(i) Gross Profit Ratio
(ii) Current Ratio
(iii) Return on Capital Employed (ROCE)
(iv) Gearing Ratio

(b) Based on your calculations in (a), analyse the trend of Vibrant Living Co. Ltd.'s profitability, liquidity, and solvency from 2022 to 2023. Also, compare its 2023 performance against the industry averages provided.

(c) Discuss how two general economic factors, such as high inflation and rising interest rates, might impact the interpretation of Vibrant Living Co. Ltd.'s profitability and solvency ratios.